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Branch and Liaison Office Registration in India: RBI Approval
Neither office is registered on demand. Both are approved, on the strength of what the foreign parent can prove about itself. This page covers the eligibility gates, which of the two approval routes applies, and every filing that follows.
- Form FNC through an AD Category-I bank
- Six to eight weeks, or four to six months
FEMA 22(R)/2016RBI approval route
- 45+years of cross-border advisory
- 200+branch and liaison approvals handled
- 3jurisdictions: India, UAE, Singapore
- 50+countries of parent origin served
Quick Answer
How does a foreign company get RBI approval for a branch or liaison office?
The parent applies in Form FNC through an Authorised Dealer Category-I bank. A branch office needs a net worth of at least USD 100,000 and five profitable years. A liaison office needs USD 50,000 and three. Applications from land border countries, restricted sectors and non-profits go to the Reserve Bank for prior approval.
The gates, the routes and the clocks
- Branch office: net worth not less than USD 100,000 and a profit-making record in each of the immediately preceding five financial years.
- Liaison office: net worth not less than USD 50,000 and profits in each of the immediately preceding three financial years.
- Automatic route through the AD bank runs six to eight weeks. The Reserve Bank approval route runs four to six months.
- A Unique Identification Number is allotted on approval. Nothing operational proceeds without it.
- Form FC-1 is filed with the Registrar of Companies within 30 days of establishing the place of business, under Section 380 of the Companies Act, 2013.
- An Annual Activity Certificate is due by 30 September each year. Without it, profit remittance from a branch office is blocked.
- A liaison office may not invoice, may not contract commercially and may not earn income in India. It is funded entirely by inward remittance from the parent.
Branch office registration in India and liaison office setup follow the same application, through the same bank, under the same regulations. What differs is the eligibility bar and what the office is then allowed to do. This page covers both, and the sections below are ordered the way the decisions actually arise.
If the choice between an office and an Indian company is not yet settled, start with the comparison of all six entry routes or the wholly owned subsidiary page.
Structures Compared
Branch office or liaison office?
Both are the foreign company operating in India through a registered place of business rather than a separate Indian entity. The difference is commercial, and it is absolute: a branch office can earn income in India, a liaison office cannot. Everything else follows from that.
| Branch office | Liaison office | |
|---|---|---|
| Can it earn income in India | Yes. May invoice, contract and remit profit to the parent. | No. May not invoice, may not enter a commercial contract, may not earn income of any kind. |
| How it is funded | From its own Indian earnings, supplemented by remittance from the parent. | Entirely by inward remittance from the parent. There is no other permitted source. |
| Net worth of the parent | Not less than USD 100,000 | Not less than USD 50,000 |
| Profit track record | Profitable in each of the preceding five financial years | Profitable in each of the preceding three financial years |
| Validity of the approval | Generally granted without a fixed expiry, subject to continuing compliance. | Three years, extendable by a further three through the AD bank. No extension for non-banking finance companies or the construction and development sector. |
| Tax position | Taxed at the foreign company rate of 35 percent plus surcharge and cess on income attributable to the branch. | No taxable income where the activity restrictions are observed. A return is still filed. |
| Typical use | Engineering, EPC, IT services and professional firms servicing Indian clients directly under the parent's existing contracts. | Testing the market, building relationships and supporting the parent's exporters or importers, before committing to an operating structure. |
The mistake that costs a year
A liaison office is often chosen because it looks cheaper and the eligibility bar is lower. The constraint only becomes real when the first Indian customer asks for an invoice and there is no entity that can raise one. Converting to a branch office or a subsidiary at that point restarts the approval cycle from the beginning, and in the meantime the revenue has nowhere legitimate to sit.
The test is simple. If there is any realistic prospect of billing an Indian customer within the next two years, a liaison office is the wrong structure, whatever the eligibility position.
Eligibility
Can the parent qualify?
Two financial tests decide whether an application is worth making at all. Both look at the foreign parent in its home jurisdiction, not at anything planned in India, and both are certified rather than asserted.
| Test | Branch office | Liaison office | How it is evidenced |
|---|---|---|---|
| Net worth | USD 100,000 or equivalent | USD 50,000 or equivalent | Paid-up capital plus free reserves, less intangible assets, certified by the parent's statutory auditor or a certified public accountant in the home jurisdiction. |
| Profit track record | Each of the preceding five financial years | Each of the preceding three financial years | Audited financial statements for every year in the window. A single loss-making year breaks the test. |
| Line of business | The India activity must fall within the parent's existing business | Constitutional documents and a board resolution describing the intended India activity. | |
If the parent fails either test
An applicant that does not meet the thresholds on its own can rely on a letter of comfort from a group company that does, provided that company satisfies the net worth and profit conditions itself and the letter is supported by its audited accounts. This is the standard route for a newly formed holding entity sitting above an older trading business.
Where no group company qualifies, neither office is available and the practical answer is a wholly owned subsidiary, which carries no financial eligibility test of any kind. That is a real fork in the road and it is better identified in week one than after two months of document gathering.
Approval Route
Which approval route applies
Every application, branch or liaison, goes in through an Authorised Dealer Category-I bank. What differs is whether that bank can approve it or has to forward the file to the Reserve Bank. The difference is roughly six weeks against roughly five months, so it should be established before anything else.
Approved by the AD Category-I bank
The bank verifies eligibility, runs its own KYC on the parent through banking channels, and approves. This is the ordinary path for a manufacturer, engineering firm or professional services business with a Western European, North American, Japanese or Australian parent, operating in a sector open to 100 percent foreign investment.
Indicative timeline: six to eight weeks from a complete Form FNC, assuming documents are already apostilled.
Forwarded to the Reserve Bank for prior approval
The AD bank cannot approve. The file goes to the Reserve Bank, and in several categories on to the relevant government department for security clearance.
Applications that take this route
- Applicants from land border countries. China, including Hong Kong and Macau, plus Pakistan, Bangladesh, Nepal, Bhutan, Myanmar and Afghanistan. Ownership and control are examined, not only the place of registration, so a Singapore or Mauritius holding company does not by itself remove the question.
- Restricted sectors. Defence, telecom, private security, and information and broadcasting.
- Non-profits and government bodies. NGOs, non-profit organisations, and foreign government departments or agencies. Non-profits are generally directed to the Foreign Contribution (Regulation) Act route rather than FEMA.
- Sectors where 100 percent foreign investment is not permitted under the automatic route.
Indicative timeline: four to six months, and longer where security clearance is involved. Plan the India commercial timetable around the approval, not the other way round.
The question to answer in week one
Which route applies is determined by the parent's ownership and control, not just where it is incorporated. A group with a minority shareholder resident in a land border country can find itself on the five-month route despite a European parent company. Establish this before the apostille process starts, because the document set and the commercial expectations both depend on it.
Send us the ownership chain and the intended activity. We will tell you which route applies.
Check your approval routePermitted Activities
What each office may and may not do
Both offices are permitted a defined list of activities, and the approval is granted against the activity described in the application. Operating outside that list is not a technicality: the Annual Activity Certificate exists precisely to confirm the office stayed inside its scope.
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A branch office may
- Export and import goods
- Render professional or consultancy services
- Carry out research in areas in which the parent is engaged
- Promote technical or financial collaborations between the parent and Indian companies
- Act as buying or selling agent in India
- Provide information technology services and develop software
- Provide technical support for products supplied by the parent
- Represent a foreign airline or shipping company
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A branch office may not
- Carry on retail trading of any kind
- Manufacture or process in India, directly or indirectly
- Deal in real estate, other than for the office premises
- Undertake agricultural or plantation activity
- Practise Indian law
Manufacturing and retail are available to a foreign group through an Indian subsidiary. They are not available through a branch office at all, and no amount of drafting changes that.
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A liaison office may
- Represent the parent or its group companies in India
- Promote export from and import into India
- Promote technical and financial collaborations between the parent and Indian companies
- Act as a communication channel between the parent and Indian parties
That is the complete list. It is deliberately narrow.
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A liaison office may not
- Raise an invoice to anyone, in India or abroad
- Enter into a commercial contract in its own name
- Earn income of any kind in India
- Charge a commission or fee, including to the parent
- Borrow, or accept deposits
All expenses are met exclusively from inward remittance received from the parent through normal banking channels.
Where an office quietly drifts out of scope
For a branch, the common pattern is one approved for technical support that begins invoicing for implementation work, or one approved as a buying agent that starts taking title to goods. For a liaison office it is subtler: the India team begins negotiating terms rather than introducing parties, or a local cost is recharged to a customer. Neither looks dramatic internally. Both change the character of the activity, and both surface when the auditor comes to sign the Annual Activity Certificate and cannot.
Registration Process
The application: Form FNC
Form FNC is the single application for a branch, liaison or project office. It is submitted to the designated AD Category-I bank, which is also the bank the office will operate through afterwards, so the choice of bank is not administrative.
Establish the office type, the route and the AD bank
Settle branch or liaison against the commercial plan, determine whether the automatic route or the RBI route applies, and appoint the AD Category-I bank. The bank runs the KYC on the parent and will be the channel for every subsequent filing.
Assemble and apostille the parent's documents
Certificate of incorporation, charter documents, audited accounts for the relevant window, the auditor's net worth certificate, board resolution, and details of the proposed activity and office. All executed outside India and authenticated by apostille or consular legalisation.
Swift-based verification of the parent
The AD bank obtains a KYC report on the parent from its bankers in the home jurisdiction, through banking channels. This step depends on a third party overseas and is a common source of quiet delay.
File the application
Submitted with the document set to the AD bank. Where the RBI route applies, the bank forwards it with its comments.
Approval and allotment of the UIN
A Unique Identification Number is allotted to the office on approval. It identifies the office in every later filing and remittance, and nothing proceeds without it.
Register with the Registrar of Companies
Form FC-1 under Section 380 of the Companies Act, 2013, with the approval letter and the parent's charter documents. The 30 days run from establishing the place of business, not from the approval date.
PAN, TAN, bank account and registrations
PAN and TAN for the office, a rupee account with the designated AD bank, and for a branch, GST and Import Export Code registration where the activity requires them.
Documents from the parent company
- Certificate of incorporation or registration, apostilled or consularised.
- Memorandum and articles or the local equivalent charter documents.
- Audited financial statements for the preceding five financial years for a branch office, three for a liaison office.
- Net worth certificate from the statutory auditor or a certified public accountant, stating net worth in USD as at the latest audited date.
- Board resolution approving the establishment of the India office, the intended activity, and the appointment of the authorised signatory in India.
- Letter of comfort from a qualifying group company where the applicant does not meet the thresholds itself, with that company's audited accounts.
- Banker's report from the parent's bankers in the home jurisdiction.
Documents for the India office and signatory
- Details of the proposed office and the activity to be carried on.
- Address proof for the premises, with the owner's no-objection certificate and the lease.
- Identity and address proof of the authorised representative in India, apostilled where the person is a foreign national.
- Power of attorney in favour of the authorised representative.
- Expected funding from the parent and projected activity levels.
After Approval
Registration and setup
Approval from the AD bank or the Reserve Bank permits the office. It does not register it. Two separate regulators are involved and the Companies Act clock is the tighter of the two.
| Step | Timing | Authority and form |
|---|---|---|
| Register the place of business | Within 30 days of establishing it | Registrar of Companies, Form FC-1 under Section 380, with the approval letter, the parent's charter documents and details of the directors and authorised representative. |
| PAN and TAN | Before the first payment or receipt | Income Tax Department. Both offices need them, a liaison office included, because it deducts tax at source on salaries and rent. |
| Rupee account | After the UIN and PAN | The designated AD Category-I bank. For a liaison office this is the sole funding channel from the parent. |
| GST registration | Branch office only, where it supplies goods or services | A liaison office makes no supply and does not register, unless it is liable under reverse charge. |
| Import Export Code | Branch office, where it imports or exports | DGFT. |
| Labour registrations | On first hire | Shops and establishments, EPFO, ESIC, professional tax where the state requires it. Both office types employ staff and both register. |
| Notify changes | Within 30 days of the change | Form FC-2 with the Registrar, for any alteration to the parent's charter, registered office, directors or the authorised representative in India. |
Annual Compliance
Annual compliance
Two annual obligations sit on top of the ordinary tax and accounting calendar, and for a branch office one of them controls whether money can leave India. A liaison office carries a third: its approval expires.
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Annual Activity Certificate
Issued by the office's statutory auditor and filed by 30 September each year with the designated AD Category-I bank, which routes it onward to the Reserve Bank, and with the Director General of Income Tax (International Taxation) in New Delhi.
It confirms the office undertook only the activities permitted under its approval. Both office types file it.
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Form FC-3
Filed with the Registrar of Companies under Section 381 within six months of the close of the financial year, carrying the audited accounts and a list of every place of business the foreign company has in India.
Groups with a second Indian site sometimes miss that all locations are disclosed here.
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Liaison office renewal
A liaison office approval runs for three years and is extended by a further three through the AD bank, on application before expiry with the Activity Certificates for the period.
No extension is available to non-banking finance companies or to the construction and development sector, which must convert or close.
| Obligation | Timing | Applies to |
|---|---|---|
| Annual Activity Certificate | By 30 September | Both. Filed with the AD bank and DGIT (International Taxation). |
| Form FC-3, annual accounts | Within 6 months of the financial year end | Both. Registrar of Companies. |
| Statutory audit | Annual | Both. Indian statutory auditor appointed for the office. |
| Income tax return | Annual | Both. A liaison office files even though it has no taxable income. |
| Transfer pricing certification | Where there are dealings with the parent or group | Primarily branch offices. Form 3CEB. |
| Withholding tax returns | Quarterly | Both, on salaries, rent and professional fees. |
| GST returns | Monthly or quarterly where registered | Branch offices. |
| Extension application | Before the end of the third year | Liaison offices. |
The Annual Activity Certificate is not paperwork
For a branch office, profit remittance to the parent is conditional on it, and the block persists until the position is regularised. For a liaison office, the certificates for the period are what the extension application rests on. Because the certificate depends on the auditor being able to say the office stayed within its permitted activities, a drift discovered in September is a problem that started the previous October.
Tax & Repatriation
Tax and getting money out
A branch office is a permanent establishment of the foreign company and is taxed as one. A liaison office, operated within its restrictions, has no taxable income, though the position is tested rather than assumed.
| Point | Branch office | Liaison office |
|---|---|---|
| Rate of tax | Foreign company rate of 35 percent, plus surcharge and cess, on income attributable to the branch. Reduced from 40 percent by the 2024 amendments. | No taxable income where the activity restrictions are observed. |
| Second layer | None. Post-tax profits are remitted without a further distribution tax, which is the structural advantage over a subsidiary. | Not applicable. There are no profits to remit. |
| Return filing | Annual return of income. | Annual return still required, reporting nil taxable income. |
| Transfer pricing | Applies to dealings with the parent and group. Form 3CEB. Attribution of profit to the permanent establishment is a frequently disputed area. | Limited relevance, but the funding arrangement should be documented. |
| Remittance | Permitted through the designated AD bank on the Annual Activity Certificate, audited accounts, and an auditor's certificate that profits are genuine and taxes paid. | Funds flow inward only. There is no outward remittance other than the surplus on closure. |
The liaison office tax position is not automatic
A liaison office is outside the tax net because of what it does, not because of what it is called. Where the India team is found to be negotiating prices, concluding contracts or carrying out core activities for the parent rather than merely liaising, the revenue authorities can and do assert that a permanent establishment exists, with tax attributed to it for past years. The protection lies in operating within the permitted list and being able to evidence it.
Run the branch against subsidiary comparison before committing
A branch pays roughly 35 percent and remits freely. A subsidiary pays roughly 25.17 percent effective and then bears dividend withholding on distribution. Which is cheaper depends entirely on what proportion of profit leaves India and how soon. Where most is reinvested, the subsidiary wins comfortably. Where nearly all goes back to the parent each year, the gap narrows and can reverse. That calculation takes an hour and it belongs before the Form FNC, not after.
Pending Reform
The 2025 draft regulations, and what they would change Pending
On 3 October 2025 the Reserve Bank issued for consultation the draft Foreign Exchange Management (Establishment in India of a branch or office) Regulations, 2025, which would replace FEMA 22(R)/2016. They had not been notified when this page was last reviewed, so everything above remains the operative position. What follows matters for timing decisions, not for how an application is made today.
| Area | Position today | Proposed |
|---|---|---|
| Net worth | USD 100,000 for a branch, USD 50,000 for a liaison office | Thresholds removed |
| Profit track record | Five years for a branch, three for a liaison office | Requirement removed |
| Permitted activities | A prescriptive list. Anything outside it is not allowed. | A negative-list approach. Anything not prohibited or under the approval route in the FDI policy would be permitted. |
| Same line of business as the parent | Required | Requirement removed |
| Additional offices | Prior approval and a fresh document set | Intimation to the designated bank |
| Project offices | One office per project | A single project office able to handle multiple projects, with separate books per project and consolidated banking |
| Conversion | Not provided for | Existing offices could be converted into branches |
| Appeals | No formal mechanism | A formal appeal process against refusal |
| Annual reporting | Annual Activity Certificate per office | Consolidated annual compliance reporting for multi-location entities, with transaction restrictions for non-submission |
What to do with this now
If the parent comfortably meets the current eligibility tests, there is no reason to wait. Apply under the framework in force.
If the parent fails the net worth or profit test, there are three options rather than one: apply with a letter of comfort from a qualifying group company, incorporate a subsidiary instead, or wait. Waiting is only rational where the India timetable is genuinely flexible, because a draft issued for consultation carries no commitment as to when, or whether, it is notified in its current form.
Groups whose intended India activity sits outside the current permitted list would benefit most from the proposed negative list. They should assume the present restrictions apply and structure accordingly.
Not sure whether to apply now or restructure?
Talk to the India entry teamCommon Pitfalls
Where these applications go wrong
Four patterns account for most refused, delayed or later-regretted applications. None of them is about the form itself.
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The route was assumed, not established
A group treats itself as an automatic-route applicant on the strength of where the parent is incorporated, gathers and apostilles a full document set, and discovers at filing that an ownership interest traced to a land border country puts the file on the Reserve Bank route. The documents are not wasted. Four months of commercial planning are.
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A liaison office chosen for a business that will earn revenue
The lower eligibility bar makes it attractive, and the restriction is treated as a detail to work around later. It cannot be worked around. The first Indian customer who asks for an invoice ends the arrangement, and converting restarts the approval cycle.
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The activity described does not match the activity intended
The Form FNC describes technical support because it reads as the safest option, and the business plan is implementation and delivery. The approval is granted for what was described. The gap surfaces at the first Annual Activity Certificate, when the auditor is asked to certify something that is no longer true.
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The profit test fails on one year
A single loss-making year, often during the pandemic period or a restructuring, breaks a test that requires profit in each of the preceding five years for a branch or three for a liaison office. It is discoverable in an afternoon from the audited accounts, and it is routinely discovered in month two instead, after the apostille bill has been paid.
Conversion & Closure
Converting, extending or closing an office
Worth understanding before opening one, because the exit is a regulated process rather than simply ceasing to trade. An office that stops operating without formally closing leaves an open registration, continuing filing obligations and an unresolved position for the parent.
| Step | What is involved |
|---|---|
| Extending a liaison office | Application to the AD bank before the end of the third year, with the Annual Activity Certificates for the period. Extension is for a further three years. Not available to non-banking finance companies or the construction and development sector. |
| Converting a liaison office | There is no conversion mechanism under the current framework. The liaison office is closed and a fresh Form FNC is filed for a branch office, or a subsidiary is incorporated. The draft 2025 regulations propose allowing conversion, which is one of their more useful changes. |
| Application to close | Submitted to the AD bank with the approval letter and UIN, an auditor's certificate on the manner of arriving at the remittable amount, and confirmation that all liabilities in India have been met or provided for. |
| Tax clearance | Confirmation from the Income Tax Department that no assessment is pending and no tax is outstanding. |
| Registrar filing | Notice of closure of the place of business under the Companies Act, so the FC-1 registration is closed rather than left open. |
| Remittance of surplus | The remaining balance is remitted to the parent through the AD bank once clearances are in place. |
| Cancellation of registrations | GST, PAN, TAN and labour registrations surrendered in the correct order, after the final returns. |
Why IMC
How IMC handles a branch or liaison office approval
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What the engagement covers
Office type selection against the commercial plan. Route determination from the ownership chain and intended activity. Eligibility assessment against the net worth and profit tests, including whether a letter of comfort is needed. AD bank selection. Drafting the activity description so the approval matches the business plan. Apostille coordination. Form FNC filing through to the UIN. Then Form FC-1, PAN, TAN, bank account, and the annual cycle of Activity Certificate, FC-3, tax filings and, for a liaison office, the extension application.
Where the eligibility tests fail, we say so in the first week and price the subsidiary alternative rather than proceeding with an application that will not succeed.
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Credentials
Established in 1979. Offices in Delhi NCR, Mumbai, Dubai and Singapore. 150+ professionals. Registered with the ICSI, ICAI and ICMAI. India, UAE and Singapore are run as a single corridor practice rather than three unconnected offices.
What to have ready before the first call
The parent's country of incorporation and its ownership chain including any shareholder above 10 percent, the profit position for each of the last five years, the intended activity in India stated plainly, and whether the India operation will invoice anyone. Those four answers determine the office type, the route, the eligibility and whether an office is the right structure at all.
Meet The Team
Experts behind this service
The people who will actually run your branch or liaison office approval, end to end.
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Shriya Mandal
Director - Compliance
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Deepakshi Sukhwani
Senior Associate - Corporate Services
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Mudita Gehlot
Senior Associate - Corporate Services
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Poornima J
Director - Strategic Partnerships & Business Development
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Ninad Parkar
Director
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Aishwarya Shiva
Director - Strategic Partnerships & Business Development
FAQs
Approval is always required, but usually from the Authorised Dealer Category-I bank rather than the Reserve Bank directly. The bank approves under the automatic route where eligibility is met. The file goes to the Reserve Bank only for applicants from land border countries, restricted sectors, non-profits and government bodies.
Six to eight weeks from a complete Form FNC where the AD Category-I bank can approve it, assuming documents are already apostilled. Four to six months where the application must go to the Reserve Bank, and longer where government security clearance is involved. Establish which route applies before planning the India timetable.
A branch office requires parent net worth of not less than USD 100,000 and profits in each of the preceding five financial years. A liaison office requires USD 50,000 and profits in each of the preceding three years. Net worth is paid-up capital plus free reserves less intangible assets, certified by the parent’s auditor.
A letter of comfort from a group company that meets both tests can support the application, backed by that company’s audited accounts. Where no group company qualifies, neither office is available and a wholly owned subsidiary is the practical alternative, since it carries no financial eligibility test.
No. A liaison office may not invoice, may not enter a commercial contract in its own name and may not earn income of any kind, including a commission from the parent. All expenses are met exclusively from inward remittance received from the parent through banking channels.
Three years, extendable by a further three through the AD Category-I bank on application before expiry, supported by the Annual Activity Certificates for the period. No extension is available to non-banking finance companies or to entities in the construction and development sector, which must convert or close.
A Unique Identification Number allotted by the Reserve Bank when the office is approved. It identifies the office in every subsequent filing, banking transaction and remittance. Nothing operational proceeds without it, and it is quoted on the Annual Activity Certificate each year.
Within 30 days of establishing the place of business in India, under Section 380 of the Companies Act, 2013. The clock runs from establishing the office, not from the date of the approval letter, which catches groups that take a lease before the paperwork is ready.
A certificate from the office’s statutory auditor confirming that only permitted activities were undertaken. It is due by 30 September each year, filed with the designated AD Category-I bank and with the Director General of Income Tax (International Taxation). Profit remittance from a branch office is blocked without it.
Not yet. The draft regulations issued on 3 October 2025 propose removing the net worth and profit track record requirements and moving to a negative list of activities, but they had not been notified when this page was last reviewed. FEMA 22(R)/2016 remains the operative framework and applications are made under it.
Find out which office and which route
Send the parent's country and ownership chain, the profit position for the last five years, and whether the India operation will invoice anyone. We will come back with the office type, the applicable approval route, a realistic timeline and an honest view on whether an office is the right structure at all.
Response within one working day. Initial structuring view at no cost.
IMC